EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement (the "Agreement") is
entered into this 12th day of
March, 2008 (the "Effective Date"), by
and between Far East Energy (Bermuda) Ltd., a Bermuda exempted limited liability
company (the "Company") and a
wholly-owned subsidiary of Far East Energy Corporation, a Nevada corporation
(the "Parent"),
and Xxxx Xxxxxxxxx ("Employee").
WHEREAS,
the Company desires to retain Employee as an employee of the Company to serve as
President, Chief Operating Officer, and Country Manager of the Company, with
Employee's location to be in or around the metropolitan area of Beijing, the
People's Republic of China (the "PRC");
and
WHEREAS,
the Company is desirous of employing Employee pursuant to the terms and
conditions and for the consideration set forth in this Agreement, and Employee
is desirous of entering the employ of the Company pursuant to such terms and
conditions and for such consideration.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the
Company and Employee hereby agree as follows:
1. Term. The
term of employment under this Agreement shall commence and this Agreement shall
commence on the Effective Date and shall continue for
a period ending on the second anniversary of the Effective Date, unless sooner
terminated in accordance with the terms hereof (the "Term"). This
Agreement shall be extended automatically on the same terms and conditions for a
period of one year following the end of the Term unless either party provides
notice of termination in accordance with Section 8(d) and the other terms and
conditions of this Agreement.
2. Employment;
Duties. During the period of Employee's employment by the
Company, Employee shall serve as President, Chief Operating Officer, and Country
Manager of the Company and shall have such duties, responsibilities and
authority as shall be consistent with that position as shall be assigned by the
Company, acting through its Chairman, from time to time. Employee
shall report directly and solely to the Company's Chairman. Unless
otherwise specified, all references to the term "Board" hereunder
shall mean the Board of the Company. All references to the term
"Chairman" shall mean the Chairman of the Board of the Company. All
references to the term "Compensation
Committee" shall mean the Compensation Committee of the Board of
Directors of Parent.
3. Compensation.
(a) During
the period of Employee's employment by the Company, Employee shall receive an
annual base salary of U.S.$230,000 (the "Base Salary") payable
in equal semi-monthly installments. In addition to the Base Salary, subject to
the terms and conditions of this Agreement, during the period of Employee's
employment by the Company, Employee (i) will receive an annual bonus equal to
20% of the Employee's Base Salary, payable in U.S. dollars so long as Employee’s
location of employment hereunder is the PRC (the "International Service
Bonus") and (ii) will be eligible to receive a discretionary performance
bonus in an amount to be determined by the Compensation Committee (or the Board
of Directors of Parent, if the Parent does not have a Compensation Committee)
(the discretionary performance bonus, together with the International Service
Bonus, the "Bonus"). The
International Service Bonus shall be payable in equal semi-monthly installments
over the Contract Year (as defined below) commencing on the date of this
Agreement and over each Contract Year occurring thereafter; provided that at the
time of each such semi-monthly payment Employee is an employee of the Company
hereunder and his location of employment with the Company is in the
PRC. The amount of the International Service Bonus shall be
determined based on the Base Salary at the date the International Service Bonus
is due hereunder. No International Service Bonus shall be required
under this Agreement or shall be deemed to have been accrued hereunder for any
period occurring after the date of termination of this Agreement, whether or not
the Contract Year relating to such International Service Bonus shall have
begun. The Compensation Committee (or the Board of Directors of
Parent, if the Parent does not have a Compensation Committee) shall review the
Base Salary, Bonus, and other compensation of Employee based upon performance
and other factors deemed appropriate by the Compensation Committee (or the Board
of Directors of Parent, if the Parent does not have a Compensation Committee)
and make such increases, supplemental bonus payments, or other incentive awards
as it deems fit in its discretion. Notwithstanding the foregoing, in
no event will the Base Salary be less than an annual rate of
U.S.$230,000. In addition to the Base Salary, the Bonus and other
compensation described in this Section 3, to the extent permitted by applicable
law, Employee shall be entitled to receive any benefits and fringes (whether
subsidized in part, or paid for in full by the Company) including, but not
limited to, medical, dental, life and disability insurance which the Company now
or in the future offers to any of its professional/technical or management
employees, or employees in the same class as Employee. Employee shall also be
eligible to participate in the Company's Simple XXX Savings and Retirement Plan
or other similar plan. For purposes of this Agreement, the term "Contract Year" shall
mean the twelve-month period commencing on the Effective Date and ending on the
first anniversary of the Effective Date and each twelve-month period occurring
during the period of Employee's employment by the Company
thereafter.
(b) During
the period of Employee's employment by the Company hereunder, so long as the
Employee's location of employment hereunder is in the PRC, Employee shall be
entitled to receive:
(i) an
allowance of $30,000 for each Contract Year for vacation or home leave travel,
which allowance shall be payable in twelve equal monthly
installments;
(ii) the use
of two automobiles, each with a driver provided by the Company; provided that
the Employee will use reasonable efforts to minimize the cost of driver
overtime;
(iii) business
class tickets for business travel by Employee and, if required for the Company's
business and approved in advance by the Company’s Chairman, the Employee’s
spouse; and
(iv) business
class tickets for emergency travel by Employee and/or members of Employee’s
family resident with Employee in the PRC as the result of the serious illness or
death of a parent, step-parent, grandparent, child, step-child, sibling, or
step-sibling.
(c) The
Company and Employee agree that Employee's income (other than amounts
attributable to any equity awards granted by the Company to Employee) that is
treated as taxable income for U.S. federal income tax purposes ("Covered Amounts") is
eligible for tax equalization considering the United States (the "U.S.") as the
Employee's "stay-at-home" base. The Company will deduct from the
Employee's pay an amount corresponding to the U.S. federal income tax, as well
as U.S. Social Security tax, that he would have paid had he lived and worked in
the State of Texas of the U.S. (excluding any tax liability incurred due to a
violation of Section 409A of the U.S. Internal Revenue Code of 1986, as amended
(the "Code"))("retained hypothetical
tax"), on all Covered Amounts. During the term of this
Agreement, the Company and the Employee agree that the Company will pay the cost
of the Employee's tax return preparation for both host and home country
taxes. After the Employee's tax returns are prepared, the Employee's
hypothetical tax will be recomputed to reflect the actual facts and final
Covered Amounts for the year ("final hypothetical
tax"), and the difference between the retained hypothetical tax and the
final hypothetical tax will be settled promptly thereafter by payment from the
Employee to the Company, if the final hypothetical tax exceeds the retained
hypothetical tax, or vice-versa, as the case may be. The Company intends that
all such payments shall be made no later than December 31st of the
calendar year beginning after the calendar year in which the Employee’s taxes
are remitted to the Internal Revenue Service; however, the timing of the actual
payment is dependent upon the Employee's prompt provision of all relevant data
and documentation that is reasonably necessary to compute the final hypothetical
tax. The Company assumes full liability for the actual U.S. federal
and foreign individual income tax and social contribution taxes on Covered
Amounts during the Employee's international assignment (excluding any tax
liability incurred due to a violation of Section 409A of the Code), whereas the
Employee's ultimate tax burden on Covered Amounts will be the final hypothetical
tax. The Employee shall also be responsible for all actual U.S. and
foreign income taxes and social contribution taxes on all income which is not
included in the definition of Covered Amounts, including any income from equity
compensation or any tax liability resulting from a violation of Section 409A of
the Code. The tax equalization plan, as set forth in this Section 3(c), will
apply to all years during which the Employee is on an international assignment
on behalf of the Company and an additional subsequent period based on the
carryover limit of foreign taxes for purposes of the foreign tax credit
calculation under the Code. The Employee will be responsible and
liable for the submission of host and home country tax returns. For
purposes of the Company's tax reimbursement policy, upon the Company's request,
the Employee agrees to personally provide the Company with a copy of his
completed tax return applicable to the years of his international
assignment. The Company and Employee agree to consider, in good
faith, proposals that the other may have with regard to the implementation of
the tax equalization described in this Section 3(c), or another approach to
minimize the global tax burden of the Employee and the Company as a result of
the payments and compensation provided under this Agreement.
(d) Subject
to this Section 3(d), the Company shall pay all or a portion of the Base Salary,
any Bonus, amounts due under Section 4 of this Agreement and any other amounts
due under this Agreement in United States dollars ("U.S.$"). Such
payments may be made in Chinese Yuan with the consent of the
Employee. In the event such payments shall be made in Chinese Yuan,
such payments shall be converted into Chinese Yuan denominations based on the
exchange rate between the United States dollars and the Chinese Yuan in effect
as of the close of the last business day before the day the payment is due, in
each case as the Company shall reasonably determine.
4. Relocation Costs; Housing
Allowance.
(a) The
Company shall pay the actual reasonable costs and expenses incurred by Employee
relating to Employee’s relocation to the PRC. Payment of any such
costs and expenses shall be made as soon as practicable following the Company's
receipt of documentation reasonably satisfactory to the Company substantiating
such costs and expenses.
(b) In the
event the Company requests the Employee to transfer his location of employment
in the PRC outside the metropolitan area of Beijing, PRC, the Company terminates
this Agreement without Cause (as defined below), the Employee terminates his
employment for Good Reason (as defined below) or the Agreement expires under its
own terms, then the Company will pay the actual reasonable costs and expenses
incurred by Employee relating to Employee’s relocation within the PRC or
relating to any move from the PRC to Houston, Texas, or any other location as
mutually agreed between Employee and Company. Payment of such costs
and expenses shall be made as soon as practicable following the Company’s
receipt of documentation reasonably satisfactory to the Company substantiating
such costs and expenses.
(c) The
Company agrees to pay a housing cost allowance of up to U.S.$100,000 during each
Contract Year for actual costs incurred by Employee for housing costs in the
PRC, which shall be paid to Employee or Employee’s landlord, as the case may be,
monthly during each Contract Year. Such housing cost allowance shall
be paid, at the option of the Company, to Employee or the landlord of Employee's
residence; and, at the option of the Company, any applicable lease may be held
in the Company’s name.
5. Vacation. During
the period of Employee's employment by the Company, the Employee shall be
entitled to receive six weeks of non-vested vacation with pay, plus the ten
holidays established by the Company during each Contract Year.
6. Education
Expense. The Company shall pay the reasonable costs and
expenses incurred by Employee relating to the education of the Employee's
children in the PRC sufficient to cover any tuition, fees, uniform costs, and
busing; provided however, that any amount payable under this Section 6 that
exceeds $40,000 shall be subject to the approval of the Chairman or the
Board. Employee understands and agrees that the cost of lunches,
extracurricular activities, trips outside Beijing for sports or academic
activities, and other similar activities will be borne by the
Employee.
7. Expense
Reimbursement. Employee shall be reimbursed by the Company in
accordance with the Company's business travel and expenditure policy for all
reasonable out-of-pocket disbursements incurred by Employee in connection with
the performance of his services under this Agreement, including but not limited
to expenses incurred under Section 3(b), Section 4(a) and travel expenses for
business purposes. Such reimbursement shall be made by the Company as
soon as reasonably practical following the Company's receipt of a reimbursement
request by the Employee in accordance with the Company's business travel and
expenditure policy.
8. Termination and Payments Upon
Termination.
(a) Employee
or the Company may terminate this Agreement for any reason or for no reason at
all by providing the other party with notice of termination as provided in
Section 8(d). The Company shall pay Employee his Base Salary and all
other amounts, in each such case, actually earned, accrued or owing as of the
date of termination but not yet paid to Employee under Section 3 through the
date of termination; provided that if the Employee is terminated by the Company
without Cause (as defined below) at a date on or after 180 days after the
Effective Date or the Employee terminates his employment for Good Reason (as
defined below), then the Company shall pay Employee a lump sum payment in an
amount equal to one hundred percent (100%) of Employee's annual Base Salary in
the year in which he experiences a Separation of Service (as such term is
defined under Section 409A of the Code) without Cause or the Employee terminates
his employment for Good Reason; provided further, notwithstanding the foregoing,
if the Employee's Separation of Service, either without Cause or for Good
Reason, occurs on or within 24 months of a Change in Control, then the Company
shall pay Employee a lump sum payment in an amount equal to two hundred percent
(200%) of Employee's annual Base Salary in the year in which the Separation of
Service occurs. The payment of the lump sum amount under this Section
8(a) shall be made on the earlier of the date ending on the expiration of thirty
days following the earlier of the date of the Employee's Separation of Service
or the death of the Employee; provided that notwithstanding the foregoing, to
the extent any payment under this Section 8(a) is "nonqualified deferred
compensation" and the Employee is considered a "Key Employee" of the Company
within the meaning of Section 409A of the Code and the Treasury Regulations
promulgated thereunder, then such payment shall be made on the date ending on
the expiration of sixth months and one (1) day following the date of the
Employee’s Separation from Service, or if earlier, the date of the Employee’s
death. For purposes of this Agreement a Key Employee means a "specified
employee" as described under Code Section 409A and as determined under the
policy adopted by the Company and its Parent.
(b) Employee
may terminate his employment and the Term at any time for Good Reason (as
defined below) by giving written notice as provided in
Section 8(d), which shall set forth in reasonable detail the facts and
circumstances constituting Good Reason. "Good Reason" shall
mean the occurrence of any of the following during the Term without the
Employee's consent and without the same being corrected within 30 days after the
Company being given written notice thereof:
(i) the
Company or the Parent materially reduces Employee's title, duties or
responsibilities under Section 2;
(ii) the
Company fails to pay any regular semi-monthly installment of Base Salary to
Employee and such failure to pay continues for a period of more than thirty
days;
(iii) the
Company materially reduces the Employee's Base Salary, materially reduces the
Employee's International Bonus or eliminates the Employee's eligibility to
participate in the discretionary performance bonus program for which he is
eligible pursuant to Section 3; or
(iv) the
Company materially changes the geographic location of the performance of
Employee's duties.
(c) For
purposes of this Agreement, "Cause" shall mean (i)
Employee's gross and willful misappropriation or theft of the Parent's, the
Company's or their respective subsidiary's funds or property, (ii) Employee's
commission of any fraud, misappropriation, embezzlement or similar act, whether
or not a punishable criminal offense, or Employee's conviction of or entering of
a plea of nolo contendere to a charge of any felony or crime involving
dishonesty or moral turpitude, (iii) Employee's material breach of this
Agreement or failure to perform any of his material duties owed to the Parent,
the Company or their respective subsidiaries, or (iv) Employee's commission of
any act involving willful malfeasance or gross negligence or Employee's failure
to act involving material nonfeasance.
(d) Any
termination of this Agreement by the Company or by Employee shall be
communicated in writing to the other party before the date on which such
termination is proposed to take effect and, unless otherwise agreed to by the
Company and the Employee, shall be effective immediately upon such
notice. Notwithstanding the foregoing, if this Agreement is being
terminated for Good Reason the date of the termination shall be the end of the
30 day "cure" period set forth in Section 8(a) above, or if sooner, the date the
Company notifies the Employee in writing that it will not make a
correction.
(e) From and
after the termination of this Agreement by the Company or by the Employee, the
Employee agrees to do or cause to be done all other things and acts, to execute,
deliver, file and perform or cause to be executed, delivered, filed and
performed all other instruments, documents and certificates as may be reasonably
requested by the Company or are necessary, proper or advisable in order to
effect the removal, transition, substitution or modification of the Employee as
an officer, agent, affiliate, director, manager or authorized representative of
the Company or any other positions that the Employee holds with the Parent, the
Company or their respective subsidiaries.
(f) In order
to receive the payments set forth in this Section 8, Employee must first
execute a separation agreement and release of all claims (other than the
benefits under this Section 8) in a form suitable to the
Company.
9. Binding Agreement;
Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Employee and the Company and their respective heirs,
legal representatives and permitted successors and assigns. If the
Company shall at any time be merged or consolidated into or with any other
entity, the provisions of this Agreement shall survive any such transaction and
shall be binding on and inure to the benefit and responsibility of the entity
resulting from such merger or consolidation (and this provision shall apply in
the event of any subsequent merger or consolidation), and the Company, upon the
occasion of the above-described transaction, shall include in the appropriate
agreements the obligation that the payments herein agreed to be paid to or for
the benefit of Employee, his beneficiaries or estate, shall be
paid.
10. Dispute
Resolution. Any controversy or claim arising with regard to
this Agreement shall be settled by expedited arbitration in accordance with the
provisions of the Texas Arbitration Act. The controversy or claim shall be
submitted to an arbitrator appointed by the presiding judge of the Xxxxxx
County, Texas Judicial District Court. The decision of the arbitrator shall be
final and binding upon the parties hereto and shall be delivered in writing
signed by the arbitrator to each of the parties hereto. Any appeal arising out
of the ruling of any arbitrator shall be determined in a court of competent
jurisdiction in Houston, Texas, or the federal court for Houston, Texas, and
each party waives any claim to have the matter heard in any other local, state,
or federal jurisdiction. The prevailing party in the arbitration
proceeding or in any appeal shall be entitled to recover attorney's fees, court
costs and all related costs from the non-prevailing party.
11. Survivorship. The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations and to the extent that any
performance is required following termination of this
Agreement. Without limiting the foregoing, Section 8 through 21 shall
expressly survive the termination of this Agreement.
12. Nonassignability. Neither
this Agreement nor any right or interest hereunder shall be assignable by
Employee, his beneficiaries, dependents or legal representatives without the
Company's prior written consent; provided, however, that nothing in this Section
12 shall preclude (a) Employee from designating a beneficiary to receive any
benefit payable hereunder upon his death, (b) the executors, administrators or
other legal representatives of Employee or his estate from assigning any rights
hereunder to the person or persons entitled thereto or (c) the Company from
assigning its rights and obligations under this Agreement to the Parent without
the consent of Employee.
13. Compliance with IRS
409A. It is the intent of this Agreement that no payment to the Employee
shall result in nonqualified deferred compensation within the meaning of Section
409A of the Code and the Treasury Regulations promulgated
thereunder. However, in the event that all, or a portion, of the
payments set forth in this Agreement meet the definition of nonqualified
deferred compensation, the Company intends that such payments be made in a
manner that complies with Section 409A of the Code and any guidance issued
thereunder. The Company shall be entitled to take reasonable steps to
fulfill this intent, including, but not limited to, making any amendments to
this Agreement as may be necessary to comply with the provisions of Section 409A
Code, in each case, without the consent of the
Employee. Notwithstanding the foregoing, neither the Company nor the
Parent makes any representation that the benefits provided under this Agreement
will be exempt from Section 409A of the Code and makes no undertakings to
preclude Section 409A of the Code from applying to the benefits provided under
this Agreement. In addition, the following delays of payment will not
in and of themselves constitute a violation of the deferral or distribution
requirements of Section 409A of the Code so long as such delays are based on the
Company’s reasonable understanding that such payment would:
(a) limit the
ability of the Company to take a deduction under Section 162(m) of the Code;
provided payment shall be made at the earliest date at which the Company
reasonably anticipates that the deduction of the payment amount will not be
limited by application of Section 162(m) of the Code or by the end of the
calendar year in which the Employee terminates employment;
(b) violate
the term of a loan agreement, or other similar contact, to which the Company is
a party and such violation will cause material harm to the Company; provided
payment shall be made at the earliest date at which the Company reasonably
anticipates that making such payment will not cause such violation or such
violation will not cause material harm to the Company; or
(c) violate
U.S. federal securities laws or other applicable laws; provided payment shall be
made at the earliest date at which the Company reasonable anticipates making the
payment will not cause such violation.
14. Amendments to this
Agreement. Except for increases in the Base Salary, Bonus and
other compensation made as provided in Section 3 and amendments under Section
13, this Agreement may not be modified or amended except by an instrument in
writing signed by the Employee and the Company. No increase in the
Base Salary, Bonus or other compensation made as provided in Section 3 will
operate as a cancellation or termination of this Agreement.
15. Waiver. No
term or condition of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
16. Severability. If, for
any reason, any provision of this Agreement is held invalid, illegal or
unenforceable such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement not held so invalid, illegal or
unenforceable, and each such other provision shall, to the full extent
consistent with law, continue in full force and effect. In addition,
if any provision of this Agreement shall be held invalid, illegal or
unenforceable in part, such invalidity, illegality or unenforceability shall in
no way affect the rest of such provision not held so invalid, illegal or
unenforceable and the rest of such provision, together with all other provisions
of this Agreement, shall, to the full extent consistent with law, continue in
full force and effect. If any provision or part thereof shall be held
invalid, illegal or unenforceable, to the fullest extent permitted by law, a
provision or part thereof shall be substituted therefor that is valid, legal and
enforceable.
17. Notices. All
notices, requests and other communications under this Agreement must be in
writing and will be deemed duly delivered (a) when delivered if delivered in
person, (b) three days after being sent by registered or certified mail, return
receipt requested, postage prepaid, (c) one day after being sent for next
business day delivery, fees prepaid, via a reputable nationwide overnight
courier service, (d) on the date of confirmation of receipt of transmission by
facsimile or (e) on the date of the notice being sent by e-mail at the e-mail
address in the records of the Company, in each case to the intended recipient as
set forth below (or to such other address, facsimile number, email address or
individual as a party may designate by notice to the other
parties):
If to Company:
Far East
Energy (Bermuda), Ltd.
c/o Far
East Energy Corporation
000 Xxxxx
Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxx
000
Xxxxxxx,
Xxxxx 00000
Attention: Chief
Executive Officer
E-mail
Address: XXxXxxxxxx@xxxxxxxxxxxxx.xxx
Facsimile:
000-000-0000
If to
Employee:
Xxxx
Xxxxxxxxx
c/o Far
East Energy (Bermuda), Ltd.
Room
806-811 Floor 8 Tower A
Tian Yuan
Gang Center
X0 Xxxxx
Xxxx, Xxxx 0xx Xxxx
Xxxx
Xxxxxxxx
Xxxxxxxx
Beijing,
100027, P.R. of China
Email
Address: XXxxxxxxxx@xxxxxxxxxxxxx.xxx
Facsimile:
011-86-10-8441-7682
or to
such other address, facsimile number or e-mail address in the records of the
Company at the time of such notice, request or communication.
18. Headings. The
headings of sections are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the provisions of this
Agreement.
19. Governing
Law. This Agreement has been executed and delivered in the
State of Texas, and its validity, interpretation, performance and enforcement
shall be governed by the laws of Texas, without giving effect to any principles
of conflicts of law.
20. Withholding. All
amounts paid pursuant to this Agreement shall be subject to withholding for
taxes (federal, state, local or otherwise) to the extent required by applicable
law.
21. Counterparts. This
Agreement may be executed in counterparts, each of which, when taken together,
shall constitute one original Agreement.
22. No
Conflicts. Each of the Company and Employee represents
and warrants to the other party that neither the execution, delivery and
performance by the such person of this Agreement will conflict or be
inconsistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, any agreement to which such person is a party or
which it or he may be subject.
[Remainder of page
intentionally left blank; Signature page follows]
IN
WITNESS WHEREOF, the Company has caused its duly authorized officer and
directors to execute and attest to this Agreement, and Employee has placed his
signature hereon, dated this 12th day of March 2008.
COMPANY:
FAR
EAST ENERGY (BERMUDA), LTD.
By: /s/ Xxxxxxx X.
XxXxxxxxx
Name: Xxxxxxx X.
XxXxxxxxx
Title: Chairman
EMPLOYEE:
By: /s/ Xxxx
Xxxxxxxxx
Xxxx
Xxxxxxxxx
